Buying or adapting a home so that parents, adult children and grandchildren can live together raises three sets of questions: how the purchase or renovation is financed when several family members contribute, how the title and the family’s agreements are set up, and how the federal Multigenerational Home Renovation Tax Credit (MHRTC) helps pay for a self-contained unit for a senior or an adult with a disability. This guide covers all three. It is one of our guides to buying outside the standard single-borrower route.
Ways families share a home
| Arrangement | What it looks like |
|---|---|
| Secondary suite | A basement apartment or in-law suite with its own entrance |
| Attached addition | A new wing or storey with a separate entrance, connected to the main house |
| Laneway or garden suite | A detached unit on the same lot |
| A large single home | Shared living space with private bedrooms |
| Duplex or side-by-side | Two separate units on one property |
| Why families do it | What it involves |
|---|---|
| Shared housing costs | The mortgage, property tax and utilities split across more incomes |
| Childcare | Grandparents nearby to help with grandchildren |
| Care for aging parents | Support at home instead of, or before, a care facility |
| A better property | Pooled money can buy more space or a better location than any one household could alone |
Financing a multigenerational home
Buying together
When parents and adult children buy together, the lender combines the incomes, debts and credit of everyone on the application, and every borrower is liable for the whole mortgage. Each person’s own retirement and borrowing plans are affected, because the mortgage counts against their debt ratios. Families who want a parent to back the mortgage without owning part of the home use a guarantee instead, covered in co-signing or guaranteeing a mortgage.
| Structure | How it works |
|---|---|
| Everyone on the mortgage and title | All incomes count toward qualifying; all borrowers are liable |
| Children buy; parents give part of the down payment | A gift letter for the lender, or a written loan agreement if the money is to be repaid |
| Parents own; the family adds a suite | Financed with a refinance, a home equity line or a renovation loan on the parents’ home |
Adding a suite to a home you own
Renovation financing for an existing home is covered in home renovation loans. One option is specific to adding units: The one insured refinance is for adding secondary suites: since January 15, 2025, a home you or a close relative live in can be refinanced with mortgage insurance up to 90% of its as-improved value to build additional units, up to 4 units in total, and the extra money can only pay for the construction, with no equity taken out. Grants, forgivable loans and other secondary suite programs offered by provinces and cities are listed in secondary suite incentives.
The Multigenerational Home Renovation Tax Credit (MHRTC)
The MHRTC is a refundable federal tax credit for the cost of creating a self-contained secondary unit so that a senior, or an adult who is eligible for the disability tax credit, can live with a relative. For the 2025 tax year, it is 14.5% of up to $50,000 in qualifying expenses, a credit of up to $7,250 for each qualifying renovation. Because it is refundable, you get the credit even if you owe no tax.
Who and what qualifies
| Condition | What the CRA requires |
|---|---|
| The secondary unit | A self-contained unit with a private entrance, kitchen, bathroom and sleeping area, newly built or created from space that didn’t already qualify as a secondary unit, meeting local permits, codes and bylaws |
| Where it is | In the existing home or on the same land, as a separate structure if needed, in Canada |
| Completion | The renovation is completed in the tax year you claim it, whenever it started |
| The qualifying individual | Someone 65 or older at the end of the year, or 18 to 64 and eligible for the disability tax credit |
| One claim per person | Only one renovation can ever be claimed for a given qualifying individual |
| Who can claim | A Canadian resident for the whole year who lives, or plans to live, in the home within 12 months of the renovation, or who owns it, and who is the qualifying individual, their cohabiting spouse or partner, or a qualifying relation |
| A qualifying relation | An adult (18 or older) who is a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece or nephew of the qualifying individual or of their cohabiting spouse or partner |
| The home | Owned by the qualifying individual or a qualifying relation, and lived in by both within 12 months of the renovation |
Family members who share the renovation’s cost can split the credit, but the combined claim for one renovation can’t exceed the $50,000 expense limit.
Expenses that count
| Qualifying | Not qualifying |
|---|---|
| Work by professionals such as electricians, plumbers, carpenters and architects | The value of your own labour or tools |
| Building materials, fixtures and building plans | Household appliances and home-entertainment electronics |
| Permits | Routine repair and maintenance |
| Equipment rentals for the renovation | Housekeeping, security, gardening and similar services |
| Financing costs | |
| Work by a relative, unless they are registered for GST/HST | |
| Expenses without receipts, reimbursed, or already claimed under the medical expense or home accessibility tax credits |
A family spends $70,000 building a basement suite for a grandparent. Only $50,000 of it counts, so the credit is $7,250, paid even if the family member claiming it owes less tax than that.
Title and family agreements
How parents and adult children hold title decides what happens to each share when a parent dies. If the parents’ share is meant to go to all their children rather than only to the child they live with, owning as tenants in common with the shares set out in their wills is one way to do it; joint tenancy vs tenancy in common explains the survivorship, probate and tax trade-offs.
| Document | Why families use it |
|---|---|
| Co-ownership agreement | Sets each person’s share, who pays which costs and how decisions are made; see buying a home with friends or family |
| Occupancy terms | Who lives where, and each person’s rights if the relationship changes |
| Exit provisions | What happens if one household wants to move out, including a buyout method |
| Updated wills and powers of attorney | Reflect the new ownership, especially when one owner’s share is meant for other children |
Tax when family members live with you
If they live rent-free
| Item | Treatment |
|---|---|
| Rental income | None to report |
| Expenses | No rental deductions |
| Principal residence exemption | Generally unaffected, since there is no income-producing use |
If they pay rent
| Item | Treatment |
|---|---|
| Rental income | Reported, with a share of the home’s expenses deducted |
| Principal residence exemption | Can be reduced for the rented part, depending on how the suite is built and used |
| Rent well below market value | The CRA may treat the arrangement as cost-sharing rather than a rental business, so expenses can’t create a rental loss |
How rental income from a suite is taxed is covered in basement suite income.
Zoning and permits
| Check | Why it matters |
|---|---|
| Zoning bylaws | Whether a secondary or garden suite is allowed on the lot |
| Building permits | Required for a legal suite, and for the MHRTC |
| Fire separation | Safety requirements between units |
| Parking | Some municipalities require an extra space |
| Minimum unit size and a separate entrance | Municipal standards for a self-contained unit |
Advantages and drawbacks
| Advantages | Drawbacks |
|---|---|
| Costs shared across more incomes | Less privacy, unless the design separates the households |
| Family support for children and aging parents | Family conflict, which written agreements help contain |
| The MHRTC toward the cost of a suite | Financing is more complex with several borrowers |
| A well-built legal suite can add value to the home | Zoning and permits may limit what you can build |
Other shared-living models, such as housing co-operatives, are covered in co-op housing.
The bottom line
A multigenerational home works best when the financing, the title and the family’s agreements are settled before anyone moves in. The MHRTC covers part of the cost of building a self-contained unit for a senior or an adult with a disability, as long as the unit, the people and the expenses meet the CRA’s conditions.
Sources
The figures and rules on this page come from these sources, last checked against them between September 29, 2026 and October 1, 2026. How we check facts.
- Canada Revenue Agency: Multigenerational home renovation tax credit (MHRTC) : Personal income tax
- CMHC: CMHC Refinance for Building Secondary Suites
- Financial Consumer Agency of Canada: Home equity lines of credit
- Justice Laws (Canada): Bank Act
- Justice Laws (Canada): Eligible Mortgage Loan Regulations
- OSFI: Residential mortgage underwriting practices and procedures